Chutzpah and Cheaters Partner to Keep American Tire Workers Unemployed

June 2, 2009

Leo Gerard

A group of tire importers that should be competitors banded together recently to ally themselves with China in a trade case.

Doesn’t sound like they’re working for the interests of the United States, does it? No, they’re not. They’re collaborating with China against American manufacturing in general and American tire workers, represented by the United Steelworkers, in particular.

They’re opposing the union’s petition seeking a limit on the flood of Chinese tires that has so overwhelmed the U.S. market in the past five years that six American tire plants closed and nearly 7,000 American workers lost their jobs.

China cheats in international trade. It does so by manipulating its currency and subsidizing its manufacturing, which results in lower prices for its exports. For the tire importers, calling themselves the American Coalition for Free Trade in Tires, China cheating means higher profits.

After taking up with China, these companies are not the American Coalition of anything. They’re the Chutzpah Coalition. Here’s the quote that explains why: “If you impose quotas, you harm American jobs because of the impact on all of the people that work for independent dealers.” The Chutzpah Coalition lawyer, Jim Jochum of Jochum, Shore & Trossevim had the lack of insight to say that.

What we have here are tire import companies that grew and profited at the cost of American tire plants and American workers now asserting that if they are forbidden from importing limitless tires, then the result will be terribly wrong and unfair because some of their importing jobs might have to be cut.

If imports are limited, preserving thousands of American tire workers’ jobs, here’s what Del-Nat president Jim Mayfield asked at the Chutzpah Coalition press conference, “What’s supposed to happen to my company and my workers?” A call to Del-Nat asking for the total number of employees got this response: 68.

For those unfamiliar with Yiddish, chutzpah is not generally considered a positive attribute. The typical definition goes something like this: A boy kills his parents then seeks the court’s mercy because he’s an orphan.

In dealing with the Chinese and this coalition, there’s reason to believe chutzpah can be deadly. Chinese manufacturers are notorious for cutting corners in ways that proved lethal to consumers. Babies, cats and dogs have all died from melamine-laced milk and pet food from China. In another case, the Chinese manufacturer of Aqua Dots substituted a chemical, which when ingested reacted like the “date rape” drug, forcing a recall of the toy after it sickened American children who put the dots in their mouths, and caused at least one youngster to end up in a coma.

And then there’s the tire case. On Aug. 12, 2006, four Philadelphia carpenters were driving home after work when the treads on one of the Chinese-made tires on their van separated. The rollover crash that followed killed two of the men and permanently impaired a third. An investigation showed that the tires, imported by Foreign Tire Sales — one of the members of the Chutzpah Coalition — did not contain a gum strip between belts necessary to prevent tread separation.

Initially, when the National Highway Traffic Safety Administration ordered Foreign Tire Sales to recall the defective tires, the company said it couldn’t afford to do that. Foreign Tire said it could pay only 10 to 15 percent of the approximately $80 million cost of recovering nearly half a million tires. Sure, it could profit from importing defective products. But it wasn’t prepared to pay to clean up the mess.

Later, it decided that only 255,000 tires needed to be returned. Ultimately, Foreign Tire was spared when drivers turned in fewer than 20,000 of those tires — less than 8 percent of the total. Who knows what happened to the remainder of those questionable tires or the people driving the cars they were on.

Foreign Tire, the Chutzpah Coalition and China want to continue importing freely — free trade not fair trade. And Chinese officials have taken steps to ensure that happens. Early in May, according to a report in the People’s Daily, China’s Vice Minister of Commerce met with U.S. Embassy personnel in Beijing “to negotiate on two trade remedy investigations targeting Chinese-made products that U.S. industries recently filed with the U.S. government.”

After that, the International Trade Commission released a memo revealing that Chinese officials attempted to discuss trade cases in a private meeting — a contact that was improper because other parties in these cases did not have an opportunity to argue their side. The ITC memo said China expressed particular concern about petitions filed under Section 421, the China-specific trade safeguard law that the USW used in the tire case.

Here’s what is at risk for China and their Chutzpah Coalition allies: in 2004 China sent 14 million tires to the U.S. valued at $453 million. By last year, that had increased to 46 million tires valued at $1.7 billion.

The USW wants the U.S. International Trade Commission to limit the imports to the 2005 level, which was 21 million. That number then could rise by five percent the following year, and five percent more the year after that.

Congress added Section 421 to the U.S. Trade Act in 2000 to give U.S. industries and workers an opportunity to obtain product-specific relief from sharp increases in imports from China. Section 421 could provide resolution more quickly than a dumping or countervailing duty case.

Another good reason to call this group of tire importers the Chutzpah Coalition is that in its news release, announcing its formation, it suggested it represented “thousands of Americans working in the tire industry.” Not likely. Two of the six members refused to say how many employees they have — Dunlap & Kyle Co., Inc. and Foreign Tire. But the total employed in the U.S. for the other four together: American Omni Trading Co.; Del-Nat Tire Corp.; Hercules Tire & Rubber Co. and Orteck Global Supply & Distribution Co., is 400.

That’s hardly “thousands of Americans.”

But they’ve cost 7,000 Americans their jobs. And they’re fine with that. They’re working hard every day to add more to that number.

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Trump’s tariff war hasn’t solved the trade deficit problem. The August trade deficit with China was the highest on record, at $38.6 billion, and the deficit for 2018 is projected to be the largest ever. The trade deficit – that is, the billions more that China sells in the United States than the United States sells in China – is what kills jobs. As that deficit rises, more work to produce goods and services is done in China. If the deficit declined, or trade balanced, more work would be done in the United States. That is the administration’s goal. If it could be accomplished, workers’ job anxiety would ease.

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About Leo Gerard

Leo W. Gerard, International President of the United Steelworkers (USW), took office in 2001 after the retirement of former president George Becker.